2025-11-21 21:03:24
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Concerns about runaway spending, circular financing, and shaky startup economics dominate the headlines. But NVIDIA’s quarter tells the other side of the story.
CEO Jensen Huang set the tone:
“There has been a lot of talk about an AI bubble. From our vantage point, we see something very different. As a reminder, NVIDIA is unlike any other accelerator. We excel at every phase of AI, from pre-training and post-training to inference. [...] The world is undergoing three massive platform shifts at once, the first time since the dawn of Moore’s Law.”
Those three shifts matter:
⚡️ Accelerated computing replaces CPUs.
🧠 Generative AI reshapes hyperscale workloads.
🤖 Agentic and physical AI create entirely new categories.
Because all three run on the same architecture, NVIDIA captures the compounding effect of the entire AI stack expanding at once.
With overwhelming demand through 2026, the near-term “AI bubble implosion” narrative looks increasingly disconnected from reality.
Let’s break down the quarter.
Today at a glance:
NVIDIA’s Q3 FY26.
Business highlights.
Key quotes from the call.
What to watch moving forward.
NVIDIA’s fiscal year ends in January, so the October quarter was Q3 FY26.
Huang said Blackwell sales were ‘off the charts.’ The chart below makes the point.
Revenue jumped +22% Q/Q and 62% Y/Y to $57.0 billion ($1.9 billion beat).
⚙️ Data Center +25% Q/Q and +66% Y/Y to $51.2 billion.
🎮 Gaming -1% Q/Q and +30% Y/Y to $4.3 billion.
👁️ Professional Viz +26% Q/Q and +56% Y/Y to $0.8 billion.
🚘 Automotive +1% Q/Q and +32% Y/Y to $0.6 billion.
🏭 OEM & Other +1% Q/Q and +79% Y/Y to $0.2 billion.
Gross margin was 73% (-1pp Y/Y).
Operating margin was 63% (+1pp Y/Y).
Non-GAAP operating margin was 66% (flat Y/Y).
Non-GAAP EPS $1.30 ($0.04 beat).
Operating cash flow was $23.8 billion (42% margin).
Free cash flow was $22.1 billion (39% margin).
Cash and cash equivalents: $60.6 billion.
Debt: $8.5 billion.
Revenue +14% Q/Q and +65% Y/Y to $65.0 billion ($3.2 billion beat).
Gross margin 75% (+1.4pp Q/Q).
⚙️ Data Center hit 90% of total revenue, growing 25% Q/Q to $51.2 billion, a massive acceleration. The Blackwell ramp broadened again, with hyperscalers, sovereign customers, and large enterprises all increasing deployments. Management noted strong adoption across training, inference, and early agentic workloads. Supply remains the gating factor, not demand:
⚡ Compute revenue surged 27% Q/Q as Blackwell availability improved and large projects moved into production. The absence of China revenue is now fully baked into the baseline. The growth you’re seeing is entirely ex-China, an important signal that the AI cycle no longer depends on China at the margin.
🔌 Networking rose 13% Q/Q, reflecting the build-out of AI factories. CFO Colette Kress highlighted continued strength in Spectrum-X Ethernet, InfiniBand, and NVLink as clusters get denser and model complexity rises. Networking is becoming a structural growth engine.
🎮 Gaming was mostly flat Q/Q at $4.3 billion, lapping the Blackwell-powered GPU launch last quarter but still up 30% Y/Y. GeForce maintains strong demand, even as the company reallocates more supply toward Data Center.
👁️ Professional visualization grew 26% Q/Q, benefiting from workstation upgrades and AI-accelerated design workflows. This segment continues to recover as enterprises modernize their tooling.
🚘 Automotive was steady, up 1% Q/Q, reflecting gradual adoption of NVIDIA’s autonomous driving and digital cockpit platforms.
📉 Margins expanded again, with gross margin climbing sequentially to 73% and Q4 guided even higher to 75%. The mix continues to improve as networking scales and Blackwell availability normalizes.
🔮 The outlook is exceptional: Q4 revenue is guided up another 14% sequentially to $65 billion ($3.2 billion ahead of estimates) despite assuming zero shipments to China.
Big picture: NVIDIA is growing at breakneck speed, and the ramp is now powered by two engines: Blackwell compute and the networking fabric behind AI factories. The China reset is already absorbed, and the cycle is being driven by global AI infrastructure demand that continues to broaden, deepen, and compound.
The past quarter was a blur of mega-partnerships, each one expanding NVIDIA’s reach deeper into the AI stack.
OpenAI: Working with NVIDIA to build and deploy at least 10 GW of AI data centers. NVIDIA plans to take an equity stake and invest up to $100 billion over time as part of the multi-year buildout.
Anthropic: Signed a deep platform deal to run up to 1 gigawatt of Grace Blackwell and Rubin systems, alongside a planned $10 billion investment from NVIDIA. Anthropic will purchase $30 billion of compute from Azure and collaborate with NVIDIA on model training and hardware optimization, turning a prior non-customer into a full-stack NVIDIA partner.
xAI: xAI is building gigawatt-scale Colossus 2 AI factories anchored on Blackwell, including a 500 MW flagship site with Humane. AWS will supply up to 150,000 NVIDIA accelerators to power these workloads.
Saudi Arabia (KSA): Framework agreement for roughly 400,000 to 600,000 GPUs over three years.
Palantir: Bringing CUDA X into Ontology, with customers like Lowe’s already using it for supply chain and analytics workflows.
Fujitsu, Intel, and Arm: Announced NVLink integrations that wire their CPU roadmaps directly into NVIDIA’s ecosystem.
The combined commitments of Microsoft, OpenAI, and Anthropic effectively ensure multi-year visibility for NVIDIA’s systems and keep demand anchored in the hyperscaler ecosystem.
Jensen Huang touched on the circular financing of customers:
“No company has grown at the scale that we’re talking about and have the connection and the depth and the breadth of supply chain that NVIDIA has. The reason why our entire customer base can rely on us is because we’ve secured a really resilient supply chain, and we have the balance sheet to support them.”
NVIDIA now has a Berkshire-style challenge to put its money to work. With a fast-growing pile of $61 billion in cash, the company is investing in the most important players in AI to secure future offtake and expand the CUDA ecosystem. These deals ensure that the fastest-growing AI companies have the resources to scale, which reinforces NVIDIA’s long-term demand rather than propping it up.
Custom silicon is rising across cloud providers: TPUs at Google, Trainium at AWS, Maia at Microsoft, and Meta’s internal accelerators. These chips target specific workloads, not the frontier or the broad platform layer.
Blackwell remains the default for large-scale training, inference, and agentic systems. Even alternative accelerators often rely on NVIDIA’s networking stack, reinforcing the systems moat rather than weakening it.
Customer ASICs shift negotiating leverage at the edges, but they expand the total compute pie, and NVIDIA remains essential at the center.
China has moved from a swing factor to a structural constraint. Q3 confirmed what the last two quarters hinted: H20 demand never materialized, B-series chips face fresh US scrutiny, and China’s regulators are directing state-backed data centers toward domestic accelerators. NVIDIA shipped just $50 million of H20 this quarter, effectively zero.
Management now assumes no China revenue in both Q4 and FY27 guidance. The real risk is long-term. China is racing to build a full domestic AI stack that bypasses CUDA entirely. If successful, a market Jensen once pegged at ~$50 billion becomes structurally closed. For now, the rest of the world is more than compensating.
Check out the earnings call transcript on Fiscal.ai here.
“We currently have visibility to $500 billion in Blackwell and Rubin revenue from the start of this year through the end of calendar year 2026. [...] We believe NVIDIA will be the superior choice for the $3 trillion-$4 trillion in annual AI infrastructure build we estimate by the end of the decade. Demand for AI infrastructure continues to exceed our expectations.”
This anchors the growth looking forward and frames the $500 billion Blackwell–Rubin pipeline inside a multi-trillion-dollar decade-long build-out.
“In the end, you still only have one gigawatt of power, one gigawatt data centers, one gigawatt of power. Therefore, performance per watt, the efficiency of your architecture, is incredibly important. [...] Your performance per watt translates directly to your revenues, which is the reason why choosing the right architecture matters so much now.”
Power is the binding constraint, and that perf-per-watt is the real battleground for economics that could favor NVIDIA over the long haul.
“NVIDIA’s architecture, NVIDIA’s platform is the singular platform in the world that runs every AI model.[...] We run OpenAI. We run Anthropic. We run xAI [...] We run Gemini [...] We run science models, biology models, DNA models, gene models, chemical models [...] AI is impacting every single industry.”
Huang’s ecosystem argument is simple: one architecture, every major model, across consumer apps, enterprises, and science. It reinforces CUDA as the default AI operating layer.
A growing concern on Wall Street is the useful life of high-end AI hardware.
Every new GPU generation makes the previous one look older faster, raising fears that hyperscalers will be forced to accelerate depreciation, pressuring long-term margins and EPS projections.
Colette Kress pushed back. She emphasized that software updates extend the useful life of NVIDIA GPUs and that the shift from simple chatbots to agentic AI dramatically increases compute intensity, keeping older clusters fully utilized even as Blackwell and Rubin ramp. The worry is real, but NVIDIA’s argument is that the demand curve determines effective lifespan.
Many super investors dialed back their NVIDIA enthusiasm in the latest 13F filings covering Q3 2025. It’s not entirely surprising with the stock hitting new highs. NVIDIA remains one of the most widely held names, yet many funds are still underweight relative to its nearly 8% weight in the S&P 500.
At ~32x forward earnings, NVIDIA trades mostly in line with the rest of Big Tech. But with EPS surging 67% Y/Y, you could argue NVIDIA looks cheap. NVIDIA’s growth is supply-constrained. That means quarter-to-quarter noise matters less than understanding how long this cycle can run and what the business looks like when demand normalizes.
If you’re a regular reader, you already know what to watch:
Cycles boom and bust: Like every major tech cycle, demand will eventually plateau or reset, and it will inevitably create volatility. However, in the words of Arya Stark: “Not today.”
Networking vs. compute mix: Is networking going to make a larger share of Data Center as AI factories scale?
Sovereign AI momentum: Are more countries committing to large, multi-year infrastructure builds?
China visibility: Does NVIDIA maintain a zero-China baseline, or is there any sign of reopening?
Hyperscaler silicon adoption: How quickly are cloud providers shifting toward in-house chips, and does it eventually impact NVIDIA's margins?
Power constraints: Energy efficiency and performance-per-watt remain the next competitive frontier, with many moving pieces.
Rubin cadence: Rubin is already in the lab. Any clarity on sampling, production, or deployment timing for the next platform will move the stock.
NVIDIA sits at the center of the most important computing cycle in decades. The details will shift (China, custom silicon, financing), but the direction hasn’t changed. As long as AI factories keep scaling, NVIDIA remains the one building the rails.
That’s it for today!
Happy investing!
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Disclosure: I own AAPL, AMD, AMZN, GOOG, META, and NVDA in App Economy Portfolio. I share my ratings (BUY, SELL, or HOLD) with App Economy Portfolio members.
Author's Note (Bertrand here 👋🏼): The views and opinions expressed in this newsletter are solely my own and should not be considered financial advice or any other organization's views.
2025-11-18 21:01:52
Welcome to the Premium edition of How They Make Money.
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Every quarter, funds managing over $100 million must disclose their portfolios, offering a rare glimpse into the minds of elite investors.
13F filings capture trades from July 1 to September 30. Q3 was a story of AI strength, rate uncertainty, and renewed market concentration around a handful of mega-cap winners (but not the ones you would expect). Against that backdrop, super investors sharpened their portfolios in surprisingly different ways.
Let’s see where the smart money leaned.
Today at a glance:
Hedge funds’ strategies.
Top buys and top holdings in Q3.
Google’s narrative reset.
Implications for individual investors.
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Before we dive into 13Fs, a quick reminder: blindly copying hedge fund trades is a terrible strategy.
Investing is like shooting 3-pointers. Even Steph Curry, the greatest shooter ever, misses more than half the time. There are no sure bets, even for the pros.
Your behavior matters more than your portfolio. As Peter Lynch said, “Know what you own and why you own it.”
Conviction is what helps you hold through volatility. And conviction comes from doing your own work, not borrowing someone else’s.
As Ian Cassel puts it:
“You can borrow someone else’s stock ideas but you can’t borrow their conviction. […] Do the work so you know when to sell. Do the work so you can hold. Do the work so you can stand alone.”
Some limitations of 13F filings:
Omit short positions and cash reserves.
Offer a partial view, leaving out smaller funds.
Exclude non-US equities, bonds, and commodities.
Can be dated, given their submission 45 days post-quarter.
With all this said, let’s see what top funds were buying and holding in Q2.
Hedge funds are financial powerhouses known for flexible, aggressive strategies designed to beat the market.
Here’s what typically shapes their moves:
Market conditions: Long in bull markets, defensive or short in bear markets.
Sector trends: Shifts in regulation or consumer behavior can steer capital.
Company fundamentals: Strong earnings, free cash flow, and leadership matter.
Macro factors: Rates, inflation, geopolitics—all influence positioning.
Quant models: Many funds lean on proprietary algorithms to find edge.
Risk management: Diversification, hedging, and position sizing are key.
Investor sentiment: Fear and greed can create mispriced opportunities.
Still, it doesn’t always work out.
The Global X Guru ETF (GURU), built to track top hedge fund holdings, has underperformed the S&P 500 over the past decade, even before fees.
And those fees matter. The classic “2 and 20” model (2% of assets + 20% of gains) can significantly reduce returns. It's no wonder that many individual investors are opting for simpler, lower-cost strategies.
Our partners at Fiscal.ai gather the data on Super Investors and visualize their portfolio for you. Pick your favorite investors and see how their holdings have evolved.
In early 2020, just before the COVID market turmoil, I curated a list of 20 top-performing hedge funds using TipRanks data. The selection focused on alpha relative to the S&P 500, and I also included a few funds frequently featured in my social feeds and podcast rotation. It’s not perfect, but it remains a solid directional filter.
The 10 stocks below represent half of the top holdings listed:
🤖 AI infrastructure: META, NVDA, TSM, GEV.
☁️ Hyperscalers: AMZN, MSFT, GOOG.
📦 Global commerce: MELI, SE, V.
This list doesn’t change much from one quarter to the next, so let’s turn to the more actionable insights with the new movements in Q3.
2025-11-15 23:01:25
Welcome to the Saturday PRO edition of How They Make Money.
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Today at a glance:
📱 Tencent: Global Gaming Surge
🌐 Cisco: AI Orders Surge
🖥️ Sony: Anime Offsets Gaming Profit Dip
⚙️ Applied Materials: Preps for AI Ramp
🌊 Sea: Profit Miss Tarnishes Growth
🏦 Nu: AI-Fueled Credit
☁️ CoreWeave: Supply Stumbles
🚚 JD.com: New Biz Drags Margin
🏈 Flutter: FanDuel’s Prediction Pivot
🪙 Circle: Rate Sensitivity
👟 On: Accelerating Beyond Shoes
🥕 Instacart: Order Growth Accelerates
📆 Monday.com: Guidance Haunts Again
🌎 dLocal: Margins Squeezed
Tencent’s Q3 revenue rose 15% Y/Y to RMB 193 billion (~$27.2 billion), once again powered by a 23% rise in gaming. New blockbusters like Valorant Mobile (China’s biggest mobile launch of the year) and evergreen franchises like Honor of Kings and Clash Royale kept engagement high. Internationally, Tencent’s big bets are hitting: Delta Force surpassed 30 million DAUs, Dying Light: The Beast boosted PC revenues, and Supercell titles helped drive the huge overseas gaming beat, rising 43% Y/Y.
Net profit jumped 19% to RMB 65 billion, beating expectations. Capex fell 24% Y/Y to RMB 13B after a heavy AI build-out earlier this year. Free cash flow was flat at RMB 59 billion, while Tencent’s RMB 493 billion cash pile (including RMB 102 billion net cash) keeps it one of China’s strongest balance sheets.
Management reiterated its “measured AI” strategy, integrating its Hunyuan model into Weixin/WeChat, gaming, and ad systems rather than chasing splashy infrastructure spends. AI is already lifting ad ROAS, game engagement, and coding productivity. Weixin’s 1.41 billion MAUs continue to support monetization via mini-games, video accounts, and expanding payments (now including TenPay Global Checkout).
AI-boosted ad targeting pushed marketing services revenue up 21%. Cloud revenue improved as AI-related workloads ramped, though management cautioned that AI chip shortages limit how much compute they can rent out externally.
With AI upgrades rolling out across advertising and gaming, and a slate of major titles ahead, Tencent is delivering steady growth while sticking to margin discipline. All this, without spending aggressively on AI infrastructure like US Big Tech.
Cisco’s Q1 FY26 (September quarter) revenue rose 8% Y/Y to $14.9 billion ($100 million beat) and adjusted EPS was $1.00 ($0.02 beat).
AI infrastructure orders from hyperscalers surged to $1.3 billion in the September quarter (a massive uptick from $800 million in the June quarter). Products revenue rose 10% to $11.1 billion, driven by 15% growth in Networking.
Momentum in Networking (with product orders up 13%) and new AI partnerships (G42/UAE, NVIDIA N9100 switch) offset a temporary 2% decline in Security. Management attributed the security dip to platform transitions and a Splunk cloud-mix “timing issue.”
Cisco is now targeting $3 billion in AI revenue from hyperscalers for FY26, with a separate $2+ billion enterprise AI pipeline.
Cisco raised its full-year FY26 revenue guidance to $60.2–$61.0 billion (from $59–$60 billion) and adjusted EPS to $4.08–$4.14 (from $4.00–$4.06), citing accelerating AI demand. The Q2 outlook for both revenue and EPS also came in well ahead of consensus, as the company proves it can capture a significant share of the AI infrastructure spending.
2025-11-14 21:03:04
Welcome to the Free edition of How They Make Money.
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Disney’s channels (including ESPN, ABC, and FX) have gone dark on YouTube TV after new contract talks broke down. YouTube TV quickly countered with a $20 opt-in credit for subscribers, signaling Google believes it holds the stronger hand.
Two weeks in, Disney is reportedly losing roughly $4 million per day in affiliate fees, and Monday Night Football ratings are down ~21%. Disney is pushing its new ESPN Unlimited app and its Fubo partnership to regain leverage, but early signs suggest viewers may not follow.
A decade ago, Disney was the obvious favorite: live sports, beloved franchises, must-have content. Today, distribution is the gatekeeper — and YouTube TV’s 8+ million paid subscribers may not chase another app just to watch one network. The power has shifted quietly but decisively toward the platforms that control the doorway to live television.
That makes today’s negotiations and the wider battle around content aggregation and who ultimately controls the studios at Warner all the more important.
Today at a glance:
📈 Streaming subscriber trends
🏰 Disney: Entertainment Slips
🦚 Comcast: Broadband Bleed Slows
🎥 Warner: Studios & Streaming Shine
⛰️ Paramount: New Plan & $3 Billion Cuts
📺 Roku: Strong Guidance Spark Rally
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Remember, Netflix capped 2024 with 302 million members, but has stopped sharing membership numbers. That leaves us focusing on the best of the rest. Let’s zoom in on the streaming platforms still reporting their figures.
Of course, the outlier here is Hulu, jumping from 55 million to 64 million in the September quarter. It was almost entirely driven by distribution-led gains rather than organic standalone growth. Disney expanded its Charter bundle footprint during the quarter, pulling millions of households into Hulu’s subscriber count even if they never actively signed up for the service.
Because Disney reports Hulu subs on a “distribution-included” basis, these bundled households count the same as retail subscribers, inflating gross adds but pressuring ARPU (which declined this quarter). In other words, Hulu didn’t suddenly become a breakout growth engine. It grew because Disney pushed Hulu deeper into carrier bundles ahead of its pivot away from reporting subscriber numbers altogether, making this spike more of a structural reporting artifact than a demand signal.
Note: Platforms like YouTube Premium, Prime Video, and Apple TV+ don’t share subscriber numbers quarterly—if at all.
Now, let’s break down how the biggest players performed this quarter.
Disney’s fiscal year ends in September, so it was Q4 FY25.
📈 Streaming stays profitable: Direct-to-consumer operating income rose 39% Y/Y to $352 million, marking a fifth straight profitable quarter. Disney+ added 4 million subscribers (reaching 132 million). Domestic ARPU was flat as higher ad revenue was offset by mix shifts, while international ARPU increased 4% on currency tailwinds.
📺 Linear remains a problem: Ongoing erosion and lower political advertising continued to weigh on Linear Networks’ profit. ESPN revenue rose 2%, but the YouTube TV blackout will hit the December quarter.
🍿 Content faces tough comps: Content Sales fell 26%, largely because last year included Inside Out 2 and Deadpool & Wolverine. Lilo & Stitch remained the highest-grossing Hollywood film of the year. Q1 FY26 will see a $400 million operating income hit from the theatrical timing of Zootopia 2 and Avatar: Fire and Ash.
🏰 Experiences are the profit and growth driver: Experiences revenue rose 6% to $8.8 billion, with operating income up 13% to $1.9 billion. Disneyland Paris and consumer products licensing stood out, helping offset softer China parks attendance. Cruise demand remained robust, with high utilization and bookings up 3% for the upcoming quarter. Q1 FY26 will face $150 million in pre-opening and dry-dock expenses tied to new ships — a temporary drag on margins.
🔮 Updated guidance: Management reiterated double-digit adjusted EPS growth for FY26 and FY27, with gains weighted toward the back half due to film marketing costs, political ad headwinds, and sports-rights timing. Disney plans to double share repurchases to $7 billion in FY26 and raised its annual dividend 50% to $1.50 per share. Free cash flow is expected to rise meaningfully as investment levels normalize and DTC profitability scales.
What to make of all this?
Disney’s DTC business is now a consistent profit engine, and parks and cruises continue to offset linear pressure. But the Entertainment segment remains challenged, with weaker film output and shrinking TV revenue. With a stronger FY26 slate (The Mandalorian, Toy Story 5, Moana, Avengers: Doomsday), the path forward hinges on stabilizing Entertainment while DTC and Experiences do the heavy lifting.
📸 Big picture: Revenue fell 3% Y/Y to $31.2 billion ($0.5 billion beat), but this was entirely due to a tough comparison with last year’s Paris Olympics. Excluding the Olympics, revenue was up 3%. Adjusted EPS was flat at $1.12 ($0.02 beat), and free cash flow rose 45% Y/Y to $4.9 billion.
📉 Broadband losses improve: This was the main story. Comcast lost only 104,000 broadband customers in Q3, a major improvement from Q2’s 226,000 loss and far better than the ~140,000 analysts had feared. Pay-TV losses also slowed to 257,000 (the smallest loss in several years). Wireless was the star again, adding a new record of 414,000 lines, bringing its total to 8.9 million.
🦚 Peacock growth stalls: Peacock’s paid subscribers were flat sequentially at 41 million (missing estimates). Revenue was $1.4 billion (down Y/Y due to the Olympics comparison, but up excluding it). Adjusted EBITDA losses widened sequentially to $217 million (from $101 million in Q2 and worse than analysts expected), though this was still a large improvement versus the prior year’s $436 million loss.
🎥 Studio boosted by Dinos: Universal Studios revenue rose 6% to $3.0 billion, driven by the strong theatrical run of Jurassic World: Rebirth (which grossed nearly $900 million global box office) and higher content licensing. However, Studio’s EBITDA fell 22% to $365 million due to higher marketing and production costs for its upcoming slate.
🎢 Epic Universe still surging: Theme parks revenue continued its massive run, jumping 19% to $2.7 billion. EBITDA grew 13% to $958 million, fueled by the first full quarter of Epic Universe driving record attendance and per-capita spending.
📺 Versant spinoff & WBD rumors: Comcast confirmed its spinoff of cable channels (USA, CNBC, etc.) into Versant Media Group and will host an Investor Day on December 4, with the separation expected in “early 2026.” On the WBD rumors, co-CEO Mike Cavanagh said the “bar is very high” for M&A but confirmed they would “look at things,” specifically naming “streaming assets and studio assets” as complementary.
What to make of all this?
This quarter was a mixed bag. Broadband subscribers were better than feared, but this stabilization is coming at a high cost. Co-CEO Mike Cavanagh stated the competitive environment “will not change anytime soon” and that investments in pricing will cause more profitability pressure (and a 4% EBITDA decline) on the core connectivity unit in the coming quarters. The growth engines (Wireless/Parks) are on track, but Peacock’s stall is a soft spot. Maybe the NBA coming to Peacock will change that in Q4.
🍿 Studios on a roll: Studios revenue soared 24% Y/Y to $3.3 billion ($0.2 billion beat), with adjusted EBITDA more than doubling to $695 million. The segment was powered by hits like Superman, Weapons, and The Conjuring: Last Rites, becoming the first studio to pass $4 billion in global box office for 2025 with only 11 films. Management now expects to “meaningfully exceed” prior guidance, targeting at least $3 billion in Studios EBITDA for 2025.
📺 Linear woes accelerate: Global Networks revenue plummeted 22% Y/Y to $3.9 billion, and EBITDA fell 20% to $1.7 billion. The steep drop was worsened by comparison to last year’s Olympics, but even excluding that, revenue fell 12%. The segment continues to be hit hard by cord-cutting (carriage fees -8%) and a weak ad market (ad sales -20%), with the loss of NBA rights expected to create further headwinds in Q4.
📈 Streaming profits grow, but ARPU dips again: The streaming segment added 2.3 million subscribers (below analyst projections, attributed to a quieter content quarter lacking hits like The White Lotus), reaching 128 million globally (on track for 150 million by 2026). Revenue was flat at $2.6 billion, but adjusted EBITDA grew 19% Y/Y to $345 million. Management remains confident in hitting $1.3 billion in streaming EBITDA for 2025. However, ARPU continues to slide, falling 16% globally to $6.64 due to international expansion and domestic carriage deal renewals. Management signaled that price hikes and a password-sharing crackdown are coming.
💵 Debt down, but net loss recorded: WBD reported total revenue of $9.0 billion ($0.2 billion miss), but its net loss of $148 million or 6 cents/share was ahead of low expectations ($0.01 beat). The loss included $1.3 billion in amortization and restructuring costs. The company paid down another $1.2 billion in debt, bringing gross debt to $34.5 billion and holding net leverage steady at 3.3x.
🪧 “For Sale” sign is up: The biggest news is a formal “strategic review” announced in October after WBD received “unsolicited interest.” CEO David Zaslav confirmed, “It’s fair to say we have an active process underway.” The board is now considering all options: 1) proceeding with the planned mid-2026 split, 2) selling the entire company, or 3) selling off pieces. Suitors reportedly include Comcast, Paramount, Netflix, and Amazon. Paramount has reportedly made three separate offers, all of which were rebuffed. Despite the sale talks, both Zaslav and the company Chairman have indicated they still prefer the planned split.
What to make of all this?
The “Warner Bros.” side (Studios & Streaming) is showing strong profit growth, proving the value of its IP and scale. The “Discovery Global” side (Linear) is declining as expected, but the ad slump is making it worse. The strategic review confirms that the market sees value in the assets (especially Studios), and the company is now officially “in play” even as it continues to execute its planned separation.
📸 Big picture: In its first report as Paramount Skydance, the new company missed Q3 Wall Street expectations. Revenue was flat at $6.7 billion ($0.3 billion miss), and adjusted loss was 12 cents per share (a huge $0.50 miss). However, the stock rallied as investors cheered the new CEO’s aggressive forward-looking plan, which included $30 billion revenue guidance for 2026 ($0.2 billion beat).
📉 TV Media sinks results: The traditional TV segment was the main drag, with revenue plummeting 12% Y/Y to $3.8 billion. Ad revenue fell 12% (blamed on lower political spending), and affiliate revenue fell 7% from cord-cutting. This segment is now the main target for cuts, including the divestiture of TV businesses in Argentina and Chile.
📈 Streaming is the bright spot: The Direct-to-Consumer (DTC) segment revenue grew 17% Y/Y to $2.2 billion, driven by a 24% jump in Paramount+ revenue. Paramount+ added 1.4 million subscribers (reaching 79.1 million total) and grew ARPU by 11%. Management guided for full-year 2025 DTC profitability and “profitability growth in 2026.”
🎬 Studio stumbles: The Filmed Entertainment segment swung to a loss of $49 million. Revenue grew 30% to $756 million, but this was attributed to consolidating Skydance’s licensing. The theatrical slate underperformed, with films like Smurfs and The Naked Gun cited as disappointments.
♟️ New Strategy: Cut, Spend, and Hunt: The new Skydance-led management team set a bold new course:
Cut: Increased the total cost-savings target from $2 to $3 billion. This includes an additional 1,600 job cuts (tied to asset sales) and ~600 voluntary severances from a new 5-day return-to-office policy.
Spend: Plans to increase content investment by an incremental $1.5 billion in 2026 to “rebuild” the film slate (targeting 15+ movies/year) and bolster streaming.
Talent: Ellison is aggressively re-stacking the creative roster, signing deals with the UFC ($7.7 billion over 7 years), the creators of Stranger Things, and director James Mangold. He also acquired The Free Press for $150 million, installing Bari Weiss as editor-in-chief of CBS News. However, this new direction comes with friction, as Yellowstone creator Taylor Sheridan is reportedly leaving for NBCUniversal.
Hunt: While reportedly submitting three rejected bids for WBD, David Ellison downplayed M&A as a necessity, stating, “there are no must-haves for us. We really look at this as ‘buy versus build’ [...] we absolutely have the ability to build.”
Streamline: Announced plans to unify the tech backend for Paramount+, Pluto TV, and BET+ by mid-2026, and announced another price hike for Paramount+ effective January 2026.
What to make of all this?
This was a messy “kitchen sink” quarter where the (bad) Q3 results were completely overshadowed by the (bold) 2026 plan. Investors cheered the new strategy, sending the stock soaring. Ellison’s plan is now clear: aggressively cut from the declining linear business and plow that money (and more) into “building” the growth engines (UFC and a rebuilt studio). The talent shakeup shows a definitive break from the past.
📸 Big picture: Roku reported a massive Q3 earnings beat and strong guidance, causing the stock to rally. Total revenue grew 14% Y/Y to $1.21 billion (in line with estimates), but the company posted a surprise profit of $0.16 per share ($0.07 beat). Roku also achieved its first positive operating income since 2021, generating $25 million in net income (from last year’s $9 million loss).
📈 Platform shines: The high-margin Platform segment continues to drive the business. Revenue grew 17% Y/Y to $1.1 billion, driven by strength in video advertising and streaming service subscriptions. Management noted strong momentum from its self-serve ad platform (Roku Ads Manager) and the new integration with Amazon’s DSP.
📉 Hardware is still a loss-leader: The Devices segment revenue fell 5% Y/Y to $146 million. As expected, the hardware continues to be sold at a loss to grow the user base, posting a negative 16% gross margin ($23 million loss).
📊 Key metrics miss: Roku’s total Active Accounts hit “roughly 90 million.” However, streaming hours of 36.5 billion (+9% Y/Y) came in just below analyst estimates of ~37 billion. Notably, Roku has stopped reporting ARPU (Average Revenue Per User) as it focuses on total profit, following in Netflix’s footsteps.
🔮 Guidance & strategy: The biggest news was the strong forecast. Roku raised its full-year 2025 outlook, lifting revenue guidance to $4.69 billion($40 million raise) and massively increasing its full-year net income target to $50 million (up from a prior $20 million estimate).
What to make of all this?
The unexpected rise in the full-year profit forecast lifted investors’ spirits. Roku is proving its pivot to profitability is working faster than expected, and the market rewarded this new operating leverage, overshadowing the minor engagement miss.
📊 Stay tuned for 15 companies visualized tomorrow in our PRO coverage!
Tencent, Sony, Nu, CoreWeave, Instacart, and more.
That’s it for today!
Stay healthy and invest on!
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Disclosure: I own AAPL, AMZN, GOOG, NFLX, and ROKU in App Economy Portfolio. I share my ratings (BUY, SELL, or HOLD) with App Economy Portfolio members.
Author's Note (Bertrand here 👋🏼): The views and opinions expressed in this newsletter are solely my own and should not be considered financial advice or any other organization's views.
2025-11-11 21:03:35
Welcome to the Premium edition of How They Make Money.
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First-party data from millions of cars, vertically integrated factories, and a cost per mile expected to collapse over time. The market has rewarded that vision with a $1.4 trillion valuation—a bet on a future where human drivers disappear, car ownership fades, and every vehicle becomes a computer on wheels.
Now contrast that with everyone else.
Even if you combined the market caps of every company in rideshare and delivery, you’d still fall short of half a trillion dollars. And for good reason: today’s on-demand platforms are expensive, low-margin, and constrained by human supply.
So it’s fair to ask: Is there any autonomy upside for demand aggregators?
The market doesn’t think so. Uber trades at roughly 22x trailing free cash flow, a metric that has tripled in the past two years.
And yet, the latest Uber–NVIDIA partnership may point to a different outcome.
NVIDIA will supply the “L4 brain” and AI training computers. Uber brings the global ride-and-delivery network, driving data, and fleet-management infrastructure. Together, they’re building an AV Technology Ecosystem to bring “Uber-ready” autonomous vehicles to market. It’s the next step in Uber’s quiet AV expansion, already spanning 20+ partners. You can already order a Waymo on Uber in cities like Atlanta and Austin.
Why should you care? Because this partnership shifts autonomy from speculative to deployable. If Uber can integrate AVs at scale, its moat expands—from network effects and driver liquidity to data, logistics, and operational leverage. That could reprice what a rideshare business is worth.
The big idea: Uber’s alliance with NVIDIA marks a turning point. The question is not whether Tesla will dominate autonomy—but whether the platforms that control demand today can capture a meaningful share of the value. The ripple effects touch valuations, competitive advantage, and the entire timeline of disruption.
Today at a glance:
🚖 Uber: AV Aggregation Theory.
🛵 Grab: The Superapp Angle.
🚘 Lyft: Pragmatic Follower.
First, let’s look at where Uber is today. Q3 revenue rose 20% Y/Y to $13.5 billion ($240 million beat). A large one-off tax benefit distorted the net profit for the quarter, so it’s best to focus on operating profit.
Gross Bookings (the total dollar value spent by end users on Uber apps) surged 21% Y/Y to $49.7 billion (accelerating).
🚗 Mobility +20% Y/Y to $21.0 billion with a 30.6% take rate.
🛵 Delivery +25% Y/Y to $18.7 billion with a 19.2% take rate.
🚚 Freight flat Y/Y at $1.3 billion.
Monthly Active Platform Consumers (MAPC) rose 17% to 189 million.
Trips grew even faster at 22% Y/Y to 3.5 billion.
Despite the large top-line beat, adjusted EBITDA (up 33% Y/Y to $2.3 billion) and operating income of $1.1 billion both missed expectations, with management citing one-off legal and regulatory charges of $0.5 billion for the shortfall. It would have been a large beat without this temporary headwind. Free cash flow remained robust at $2.2 billion.
Looking ahead, Uber provided a mixed Q4 forecast. Gross Bookings guidance (+19% Y/Y to ~$53 billion) came in ahead of consensus, but the Q4 adjusted EBITDA forecast of (+34% Y/Y to ~$2.46 billion) fell $30 million short of analyst expectations. The trend remains very much alive, with adjusted profitability outpacing revenue growth and margins expanding.
The company prepares to shift its profit reporting to adjusted operating income (or adjusted EBIT) in 2026, a more conservative measure than adjusted EBITDA since it doesn’t exclude the DA part (Depreciation and Amortization). This approach makes sense since Uber has become a more mature, profitable business.
CEO Dara Khosrowshahi outlined six strategic growth areas:
Deepening engagement (more trips per user).
Hybrid future (human drivers + AVs).
Local commerce (grocery & retail).
2025-11-08 23:02:45
Welcome to the Saturday PRO edition of How They Make Money.
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📊 Monthly reports: 200+ companies visualized.
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Today at a glance:
🦎 Berkshire: Buffett’s Final Call
🍟 McDonald’s: Deals Are Working
📲 Qualcomm: Handsets Rebound
📱 Arm: AI Data Center Bet Pays Off
🌐 Arista Networks: AI Targets Soar
🇩🇰 Novo Nordisk: New Guidance Cut
🧬 Amgen: Core Franchises Boost
💉 Pfizer: Cost Cuts Drive Beat
🪶 Robinhood: Crypto Miss
☕️ Starbucks: Turnaround Takes Hold
🛖 Airbnb: International Strength
🏨 Marriott: US Softness Persists
🏎️ Ferrari: Pricing Power Shines
🔒 Fortinet: SASE Soars
🇰🇷 Coupang: Triple-Digit Taiwan Growth
⚡️ Axon: AI Growth Pain
🐶 Datadog: Broad-Based Growth
🎮 Take-Two: GTA VI Delayed Again
🔲 Block: Gross Profit Acceleration
🌮 YUM Brands: Pizza Hut on the Block
🎤 Live Nation: Global Growth Fuels Record
✈️ Expedia: B2B Jumps
📢 HubSpot: AI & Multi-Hub Traction
📺 The Trade Desk: Kokai Fuels a Beat
🎨 Figma: $1 Billion Run Rate
📌 Pinterest: Weak Outlook
🍞 Toast: ARR Tops $2 Billion
💬 Twilio: Growth Accelerates Again
🌎 Global Payments: Genius Momentum
🧬 Tempus AI: First-Time EBITDA Positive
👑 DraftKings: Guidance Slashed
👻 Snap: AI Partnership Fuels Blowout
🦉 Duolingo: Missing the Streak
💻 Paycom: AI Efficiencies Continue
💊 Hims & Hers: Novo Talks Relaunched
🗞️ NYT: Subscriber Growth Accelerates
⚡️ Celsius: Turning Into a Monster
🏴 Klaviyo: Retention Rebounds
🔥 Match Group: Hinge Acceleration
🌊 Digital Ocean: AI Demand Accelerates
🚲 Peloton: Profitability Uptick
🍽️ Tripadvisor: “Experiences-Led” Reorg
🎓 Docebo: Core Growth Masked
🍿 AMC: Box Office Softens
Berkshire Hathaway’s operating earnings improved to $14.4 billion in what marks Warren Buffett’s final earnings call as CEO. Revenue grew 2% to $95.0 billion, while net earnings rose 17% to $30.9 billion.
The operating profit jump was driven almost entirely by the insurance underwriting business, where earnings more than tripled to $2.4 billion due to a mild catastrophe season. Profit gains at BNSF (+5%) and manufacturing (+8%) also helped offset a 9% decline at Berkshire Hathaway Energy.
The cash hoard swelled to a new record of $382 billion, up from $344 billion in June. Berkshire’s cautious stance continued, with no share buybacks for the fifth straight quarter and net equity sales of $6.1 billion. The company has been a net seller of stocks for the 12th consecutive quarter.
With Buffett set to step down as CEO at year-end, successor Greg Abel inherits the massive war chest and a stock that has underperformed since the retirement announcement. However, Abel’s first major move was announced just after Q3 closed: a $9.7 billion deal to buy OxyChem, signaling a new catalyst and the first significant deployment of the cash pile.
McDonald’s Q3 revenue rose 3% Y/Y to $7.1 billion ($10 million miss), and adjusted EPS was $3.22 ($0.11 miss). The profit miss was driven by $91 million in one-time restructuring and transaction charges related to its South Korea and Israel businesses.
Global same-store sales continued their rebound, rising 4% (beating estimates), and US comps grew 2% (also a beat). US growth was driven by positive check growth from successful promotions like the Snack Wrap and various value bundles.
International Operated Markets (+4%) and International Developmental Licensed Markets (+5%) once again outperformed the US, with strong results in Germany, Australia, and Japan.
McDonald’s reaffirmed its full-year operating margin guidance in the mid-to-high 40% range. Loyalty sales continued to surge, hitting a record $9 billion for the quarter ($34 billion for the trailing twelve months) as the company remains on track for its 250 million loyalty user target.
Despite a “challenging environment,” CEO Chris Kempczinski highlighted that the company is “fueling momentum” by delivering “everyday value and affordability.” The strategy is working, as McDonald’s appears to be successfully winning over cash-strapped consumers who are pulling back from fast-casual rivals like Chipotle.
Qualcomm’s fiscal Q4 (September quarter) revenue rose 10% Y/Y to $11.3 billion ($510 million beat), with non-GAAP EPS of $3.00 ($0.13 beat). The results were driven by a 13% Y/Y growth in the QCT segment to $9.8 billion.
Handsets revenue was the standout, jumping 14% Y/Y to $7.0 billion, signaling strong demand in the premium Android tier, particularly from Samsung. Automotive revenue hit a record $1.1 billion (+17% Y/Y), and IoT grew 7% to $1.07 billion. Licensing (QTL) revenue fell 7% Y/Y to $1.4 billion.
Despite a $5.7 billion non-cash one-off charge related to a US tax bill, the company generated record free cash flow of $12.8 billion for the full fiscal year and returned $3.4 billion to shareholders in the quarter.
Management issued a blockbuster Q1 FY26 forecast, guiding revenue to $11.8–$12.6 billion and non-GAAP EPS to $3.30–$3.50, both well above consensus. The company expects record QCT Handsets revenue in Q1, driven by new Snapdragon flagship launches. CEO Cristiano Amon highlighted momentum in AI PCs (150+ designs in pipeline), automated driving, and an accelerating push into the AI data center market, with a ramp now expected in FY27.